SECURITIES PURCHASE AGREEMENT
Exhibit
10.1
THIS
SECURITIES PURCHASE AGREEMENT (the “Agreement”) is
dated as of February , 2021 among 3i, LP, a
Delaware limited partnership (the “Seller”),
________________, LLC, a Delaware limited liability company (the
“Purchaser”), and Exactus, Inc., a Nevada corporation
(the “Company”, each of the Seller, Purchaser, or
Company a “Party”, any two or more
“Parties”).
WHEREAS, the Seller
and the Company entered into that certain securities purchase
agreement dated November 27, 2019 (the “SPA”) whereby
Seller agreed, among other things, to make capital investments up
to $1.75 million in the Company and in the first closing paid
$750,000 to the Company for the purchase of an 8% senior secured
convertible note due November 26, 2020 (the “Note”,
attached hereto as Exhibit
A) and a common stock purchase warrant for 275,612 warrant
shares (the “Warrant”, attached hereto as Exhibit B, and together with the Note,
the “Securities”);
WHEREAS, on
November 19, 2020 Seller commenced litigation before the United
States District Court for the Southern District of New York, case
no. 1:20-cv-09734 (the “New York Lawsuit”) for various
claims against the Company;
WHEREAS, without
admitting or denying the allegations of Seller, the Seller and
Company, each desires to resolve its disputes, dismiss, with
prejudice, the New York Lawsuit, and release each other from all
claims and liabilities, subject to Seller receiving the payments to
be made pursuant to this Agreement and to provide for the sale of
the Note and Warrants to Purchaser, all on the terms and subject to
the conditions set forth herein (collectively, the
Transactions”);
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Parties
agree as follows:
1.1 Sale. Subject to the terms and
conditions set forth in this Agreement, Purchaser shall purchase
from the Seller and the Seller shall sell to Purchaser the
Securities for an aggregate purchase price of $250,000.00
(“Purchase Price”).
1.2 Payment. Purchaser shall make
payment of the Purchase Price to Seller pursuant to wire
instructions provided by Seller (included herein as Exhibit C) on
or before February 8, 2021 (the “Closing
Date”).
1.3 Closing. Upon all of the
conditions set forth herein, a closing shall occur by the
electronic exchange of documents, or such other location or manner
as the parties shall mutually agree. At the Closing, contingent
upon Seller’s receipt of the Purchase Price, the Company is
authorized to transfer on its books and record the Securities to
Purchaser.
1.4 Releases. At the Closing,
contingent upon Seller’s receipt of the Purchase Price, the
Releases set forth herein shall become effective.
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Definitions:
Released Company Parties are Company,
its past or present officers, directors, and employees,
consultants, subsidiaries, shareholders, insurers, co-insurers or
reinsurers, attorneys, advisors, agents, trustees, executors,
heirs, spouses, marital communities, executors, estates,
affiliates, subsidiaries and their respective
successors-in-interest and assigns.
Released 3i Parties are 3i, LP, its past
or present officers, investment managers, managers, and employees,
consultants, subsidiaries, members, insurers, co-insurers, or
reinsurers, attorneys, advisors, agents, trustees, executors,
heirs, spouses, marital communities, executors, estates,
affiliates, subsidiaries, and their respective
successors-in-interest and assigns.
Settling Parties are Company and
3i.
Released 3i Parties irrevocably release
and discharge the Released Company
Parties from any and all actions, suits, debts, sums of
money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, damages,
judgments, extents, executions, claim, demand, action, or cause of
action, known or unknown, in law or in equity, which the
Released 3i Parties, ever
had, now have or hereafter can, shall or may, have for, upon, or by
reason of any matter, cause or thing whatsoever from the beginning
of the world through and including the date hereof, including any
obligations arising under the Transaction Documents (as defined in
the SPA), , and the Released 3i
Parties further waive all claims against or in any way
connected with the Released Company
Parties or their officers or directors, including, without
limitation, any claim, demand, action, cause of action, including
money damages and claims for attorneys’ fees.
Released Company Parties irrevocably
release and discharge the Released
3i Parties from any and all actions, suits, debts, sums of
money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, damages,
judgments, extents, executions, claim, demand, action, or cause of
action, known or unknown, in law or in equity, which the
Released Company Parties,
ever had, now have or hereafter can, shall or may, have for, upon,
or by reason of any matter, cause or thing whatsoever from the
beginning of the world through and including the date hereof,
including any obligations arising under the Transaction Documents,
, and the Released Company
Parties further waive all claims against or in any way
connected with the Released 3i
Parties or their officers and directors, including, without
limitation, any claim, demand, action, cause of action, including
money damages and claims for attorneys’ fees.
1.5 At the Closing,
contingent upon Seller’s receipt of the Purchase Price, the
SPA, the Subsidiary Guaranty dated as of November 27, 2019 (the
“Guaranty”), the Security Agreement dated as of
November 27, 2019 (the “Security Agreement”), the
Intellectual Property Security Agreement dated as of November 27,
2019 (the “IP Security Agreement”) and the Registration
Rights Agreement dated as of November 27, 2019 (the
“Registration Rights Agreement”) in each case by and
between Company, any Affiliate of Company and Seller, shall
terminate and be of no force and effect. Seller consents to the
amendment and/or withdrawal of the Registration Statement on Form
S-1 filed October 30, 2020 with the SEC and shall upon request
execute and deliver a UCC3 Termination Statement for any and all
liens created under the Security Agreement and/or IP security
Agreement.
1.6 Following the
Closing, contingent upon Seller’s receipt of the Purchase
Price, the Settling Parties
will prepare all necessary settlement documents to confirm the
settlement and the dismissal, with prejudice of the New York
Litigation and file such dismissal with the court within 5 days of
the Closing. The releases herein shall include all claims raised in
the New York Litigation or that could have been raised in the New
York Litigation or brought in any other venue or forum under the
SPA or involving the
Securities.
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ARTICLE II REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the
Seller. Seller hereby makes the following representations
and warranties to the Purchaser:
(a) The Seller has full
power and authority to enter into this Agreement and to consummate
the Transaction. This Agreement has been duly and validly executed
and delivered by the Seller and constitutes the legal, valid and
binding obligation of the Seller, enforceable in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws from time to time in effect that affect
creditors’ rights generally, and by legal and equitable
limitations on the availability of specific remedies.
(b) The execution,
delivery and performance by the Seller of this Agreement and
consummation by the Seller of the Transaction do not and will not:
(i) violate any decree or judgment of any court or other
governmental authority applicable to or binding on the Seller; (ii)
violate any provision of any federal or state statute, rule or
regulation which is, to the Seller’s knowledge, applicable to
the Seller; or (iii) violate any contract to which the Seller or
any of its assets or properties are bound, or conflict with, or
constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of ,
any agreement, indenture or instrument to which Seller is a party.
No consent or approval of, or filing with, any governmental
authority or other person not a party hereto is required for the
execution, delivery and performance by the Seller of this Agreement
or the consummation of the Transaction.
(c) With respect to the
sale of the Securities, (i) the Seller is the sole record and
beneficial owner of the Securities, free and clear of any taxes and
encumbrances; (ii) the Securities, when delivered and paid for in
accordance with the terms of this Agreement, will be validly
issued, fully paid and non- assessable, free from all taxes and
encumbrances; (iii) the Securities to be delivered are not and will
not be as of the Closing Date subject to any transfer restriction,
other than the restriction that the Securities have not been
registered under the Securities Act and, therefore, cannot be
resold unless it is registered under the Securities Act or in a
transaction exempt from or not subject to the registration
requirements of the Securities Act (“Permitted Securities Law
Restriction”); and (iv) upon the transfer of the Securities
to Purchaser, Purchaser will acquire good and marketable title
thereto, and will be the legal and beneficial owner of such the
Securities, free and clear of any encumbrances, other than the
Permitted Securities Law Restriction.
(d) There are no
outstanding rights, options, subscriptions or other agreements or
commitments obligating the Seller with respect to the
Securities.
(e) The Seller has
taken no action that would give rise to any claim by any person for
brokerage commissions, finder’s fees or similar payments
relating to this Agreement or the transactions contemplated
hereby.
(f) Other than the New
York Litigation, Seller has not commenced any proceedings relating
to the Securities that are pending or, to the knowledge of the
Seller, threatened before any court, arbitrator or administrative
or governmental body that would adversely affect the Seller’s
right to transfer the
Securities to the Purchaser.
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(g) The Seller is not
now and has not been for the previous ninety-one (91) days an
affiliate of the Company.
(h) Neither the Seller
nor any person acting on behalf of the Seller has offered or sold
any of the Securities by any form of general solicitation or
general advertising.
(i) The amount due
under the Note is not less than five hundred thousand dollars
($500,000.00).
2.2 Representations and Warranties of the
Purchaser. Purchaser hereby represents, warrants and agrees
to the Seller as of the date hereof:
(a) Purchaser has full
power and authority to enter into this Agreement and to consummate
the Transaction. This Agreement has been duly and validly executed
and delivered by Purchaser and constitutes the legal, valid and
binding obligation of Purchaser, enforceable in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws
in effect that affect the enforcement of creditors’ rights
generally and by equitable limitations on the availability of
specific remedies.
(b) The execution,
delivery and performance by Purchaser of this Agreement and
consummation by Purchaser of the Transaction do not and will not:
(i) violate any decree or judgment of any court or other
governmental authority applicable to or binding on Purchaser; (ii)
violate any provision of any federal or state statute, rule or
regulation which is, to Purchaser’s knowledge, applicable to
the Purchaser; or (iii) violate any contract to which Purchaser is
a party or by which Purchaser or any of its respective assets or
properties are bound. No consent or approval of, or filing with,
any governmental authority or other person not a party hereto is
required for the execution, delivery and performance by Purchaser
of this Agreement or the consummation of the
Transaction.
(c) Purchaser is an
“accredited investor” within the meaning of Rule 501(a)
of Regulation D and is aware that the Securities are subject to
restrictions on transfer pursuant to the Securities
Act.
(d) The Purchaser is
acquiring the Securities for its own account and not with a view
towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or
exempted under the Securities Act; provided, however, that by
making the representations herein, the Purchaser does not agree to
hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an
exemption under the Securities Act.
(e) Purchaser is aware
of the Company’s business affairs and financial condition,
and has acquired sufficient information about the issuer to reach
an informed and knowledgeable decision to acquire the
Securities.
(f) Purchaser has taken
no action that would give rise to any claim by any person for
brokerage commissions, finder’s fees or similar payments
relating to this Agreement or the transactions contemplated
hereby.
(g)
Purchaser is aware
the Securities are not registered and unless registered, and
are restricted unless
and until registered or an exemption from registration exists. As
such, until the Securities are either
registered or the Borrower or its transfer agent shall have been
furnished with an opinion of counsel (which opinion shall be in
form, substance and scope customary for opinions of counsel in
comparable transactions) to the effect that the shares to be sold
or transferred may be sold or transferred pursuant to an exemption
from such registration, shall bear a legend substantially as
follows:
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“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER),
IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT OR OTHER APPLICABLE EXEMPTION. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.”
The
legend set forth above shall be removed and the Borrower shall
issue to the Holder a new certificate therefore free of any
transfer legend if (i) the Borrower or its transfer agent shall
have received an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions, to
the effect that a public sale or transfer of such Common Stock may
be made without registration under the Act, which opinion shall be
reasonably accepted by the Borrower so that the sale or transfer is
effected; or (ii) in the case of the Common Stock issuable upon
conversion of this Note, such security is registered for sale by
the Holder under an effective registration statement filed under
the Act or otherwise may be sold pursuant to Rule 144 or other
applicable exemption without any restriction as to the number of
securities as of a particular date that can then be immediately
sold.
2.3 Representations and Warranties of the
Company. Company hereby represents, warrants and agrees to
the Parties as of the date hereof:
(a) Company has full
power and authority to enter into this Agreement and to consummate
the Transaction. This Agreement has been duly and validly executed
and delivered by any authorized officer of the Company and
constitutes the legal, valid and binding obligation of Company,
enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect that affect
the enforcement of creditors’ rights generally and by
equitable limitations on the availability of specific
remedies.
(b) The execution,
delivery and performance by Company of this Agreement and
consummation by the Company of the Transaction do not and will not:
(i) violate any decree or judgment of any court or other
governmental authority applicable to or binding on Company; (ii)
violate any provision of any federal or state statute, rule or
regulation which is, to Company’s knowledge, applicable to
the Company; or (iii) violate any contract to which Company is a
party or by which Company or any of its respective assets or
properties are bound. No consent or approval of, or filing with,
any governmental authority or other person not a party hereto is
required for the execution, delivery and performance by
Company of this Agreement or the consummation of the
Transaction.
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(c) Company has the
requisite, or does not need, shareholder approval to consummate the
Transaction.
(d) Company has taken
no action that would give rise to any claim by any person for
brokerage commissions, finder’s fees or similar payments
relating to this Agreement or the transactions contemplated
hereby.
(e) By executing this
Agreement, the Company is providing any consents or acknowledgments
that may be necessary to the consummation of the
Transaction.
(f) Company
acknowledges that Purchaser has not provided any additional
consideration to the Company in connection with the consummation of
this Transaction. It is further acknowledged by the Company that
the Securities purchased herein by Purchaser shall inherit all of
the characteristics, including but not limited to the holding
period, of the Securities. As a result, for the purposes of Rule
144, the Purchaser shall be deemed to have held the Securities
beginning on the date consideration was paid by the Seller
therefore. Company further acknowledges that it shall not take any
position to the contrary.
(g) Company shall file
a Current Report of Form 8-K with the Securities and Exchange
Commission to disclose the material terms of this Agreement within
four (4) business days from the date this Agreement is executed and
delivered by the Parties;
ARTICLE III MISCELLANEOUS
3.1 Entire Agreement; Amendments.
The Agreement contains the entire understanding of the parties with
respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to
such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules.
3.2 Amendments; Waivers. No
provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the
Seller and the Purchaser or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such
right accruing to it thereafter.
3.3 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns.
3.4 No Third-Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by,
any other Person other than the Released 3i Parties and the
Released Company Parties.
3.5
Governing Law; Jurisdiction; Waiver of
Jury Trial. This Agreement shall be governed
by and
construed under the laws of the State of New York, without regard
to the choice of law principles thereof. Each party
hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the State of New York, City of
New York for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby,
and hereby irrevocably waives any objection that such suit, action
or proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
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3.6 Survival. The representations,
warranties, agreements and covenants contained herein shall survive
the Closing.
3.7 Execution. This Agreement may
be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party
and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the
same force and effect as if such facsimile signature page were an
original thereof.
3.9 Further Assurances. Each party
shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as any
other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.
3.10 Expenses.
The parties hereto shall pay their own costs and expenses in
connection herewith.
3.11 Headings.
The headings used in this Agreement are used for convenience only
and are not to be considered in construing or interpreting this
Agreement.
3.12 Drafting.
Each of the Parties hereto acknowledges that each Party was
actively involved in the negotiation and drafting of this Agreement
and that no law or rule of construction shall be raised or used in
which the provisions of this Agreement shall be construed in favor
or against any Party hereto because one is deemed to be the author
thereof.
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IN WITNESS WHEREOF, the parties hereto
have caused this Purchase Agreement to be duly executed by their
respective authorized signatories as of the date first indicated
above.
SELLER
By:
Name:
Title:
PURCHASER
By:
LLC, Its Manager
By:
Name:
Title:
Manager
COMPANY
By:
Name: Xxxxx
Xxxx
Title:
Executive Chairman
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[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
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EXHIBIT
A
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(Note)
(Warrant)
(Wiring
Instructions)
